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Cupertino Comeback? Investors May Dump Google for Apple

Is the biggest trade in tech investing for the past year -- sell Apple (AAPL) and buy Google (GOOG) -- about to reverse?

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There were certainly glimmers of a reassessment on Thursday after Google reported disappointing second-quarter earnings. The search giant said its adjusted earnings per share totaled $9.56, well below the average analyst estimate of $10.80.

Shares of Google dropped 5% after-hours to under $870.

Analysts pointed to the 6% decline in the “cost per click” that advertisers pay Google whenever someone clicks on an ad link on one of its sites or those of a partner. The drop was about double what analysts had expected, and it reignited fears that Google has not aced the massive shift from desktop computing to mobile devices.

"The CPC drop is a bit surprising, and perhaps raises again the question of whether Google really benefits from the Mobile shift," RBC analyst Mark Mahaney wrote in a research note, The Wall Street Journal reported.

On the other hand, Apple, which reports next week, may surprise on the upside based on one early indicator.

Verizon (VZ) said on Thursday that it sold 3.9 million iPhones in the second quarter – up more than 40% from the same period last year. That was about 10% to 15% more iPhones sold than analysts had expected.

Analysts overall are expecting Apple to sell about the same number of iPhones it sold in the June quarter last year -- 26 million. However, they're also looking for a decline in revenue because consumers have been flocking to cheaper models. The Verizon numbers hint that Apple may beat those expectations now.

Microsoft's adjusted earnings of 66 cents a share came in below analysts' estimates of 75 cents, and revenue of $19.9 billion underwhelmed, given expectations of $20.7 billion. Shares were off 6% in extended trading.

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